11 ways to help speed up the collection of payments.
1. Send invoices quickly.Online invoicing can help your business create and send professional invoices as soon as work is completed. Plus, in a few clicks, customers can quickly and easily pay balances. PayPal Invoicing is a leader in getting paid fast. 79% of businesses using PayPal Invoicing reported that they received payment on an invoice within a week from the time the invoice is sent out.1
2. Contact customers immediately.Don’t wait to contact a customer regarding a missed or late payment. The more time passes, the harder it will be to collect payment. When a customer misses a payment, reach out quickly to find out their payment status.
Tip: Avoid being confrontational when discussing missed or late payments. Keep conversations calm and amiable, while making sure your customer understands you don’t take late payments lightly.
3. Offer different payment methods.If you’ve been waiting for checks to arrive by mail, consider offering more payment options. Instead of accepting only checks or cash, let customers pay by credit card through a service like PayPal. They may be more likely to pay in full and on time, if they don’t have to come up with the cash to pay your invoice.
4. Offer payment plans.Being able to collect some income each month is better than getting nothing at all. If your cash flow allows, consider letting customers make installment payments until the debt is paid. For example, if a customer owes $2,500, allow them to pay $500 per month for five months. With PayPal Credit2 you can offer financing to your customers at checkout so they can buy what they want now and pay over time. While your customers get the option to pay over time, you get paid in full, upfront, with no additional risk.
5. Offer incentives.Encourage customers to pay on time with a financial incentive. For example, offer a five percent discount if they pay the balance in full within a set period. An offer like this can mean significant savings to customers with large balances and be an incentive for a customer to pay quickly and in full.
6. Require deposits.Don’t wait until you provide the service to collect payment. Ask for a deposit upfront. Even collecting a 25 percent deposit on the front end can help your cash flow and lessen the amount a customer is required to pay after a service is provided.
7. Send reminders.Customers are busy and may overlook an invoice. Form letters or reminder emails are a polite way to remind your customers payments are due. With tools like PayPal Invoicing, you can easily track and send out reminders on unpaid invoices. If you’re still not getting a response, encourage customers to reach out if they’re having trouble paying on time.
Tip: Make note of when you contact customers regarding collection of payment. Keep dated copies of physical correspondence, and notes on phone and in person conversations. In the event of legal action for nonpayment, you may need this documentation.
8. Change payment terms.If a customer is habitually late with payments, don’t extend the payment window. Change invoices to state that payment is due upon receipt. Or, require customers to pay in full before you provide the service.
9. Hire a collection agency.Consider hiring a collection agency. Expect to pay the agency a percentage of the late payments you’re trying to recover. In some cases, collection agencies buy a portion of outstanding receivables and then try to collect the money themselves.
10. If those don’t work, then…Speak with your business’s attorney about collection options. They can help determine the best option for the situation. And, if you’re facing a cash flow crunch, consider the PayPal Business Loan or PayPal Working Capital3 as a tool to help give your business cash flow relief.
But remember, the best thing you can do is to keep your customers happy. Happy customers may be more likely to pay on time. Small things can help customers know their business is valued. From sending hand-written thank you notes to engaging with customers on social media, it doesn’t take much to remind customers their business is important.
1 Source: comScore, based on a survey of 1,226 US and Canadian small- and medium–sized business owners that compared satisfaction of primary users of top invoicing tools on a range of features, December 2017. 320 of surveyed businesses are currently using PayPal.
2 PayPal Credit is subject to consumer credit approval.
3 The lender for PayPal Business Loan and PayPal Working Capital is WebBank, Member FDIC.